The nature and role of feedback text comments in online marketplaces: Implications for trust building, price premiums, and seller differentiation

The nature and role of feedback text comments in online marketplaces: Implications for trust building, price premiums, and seller differentiation

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Article ID: iaor200926529
Country: United States
Volume: 17
Issue: 4
Start Page Number: 392
End Page Number: 414
Publication Date: Dec 2006
Journal: Information Systems Research
Authors: ,
Keywords: bidding, retailing, behaviour
Abstract:

For online marketplaces to succeed and prevent a market of lemons, their feedback mechanism (reputation system) must differentiate among sellers and create price premiums for trustworthy sellers as returns to their reputation. However, the literature has solely focused on numerical (positive and negative) feedback ratings, alas ignoring the role of feedback text comments. These text comments are proposed to convey useful reputation information about a seller's prior transactions that cannot be fully captured with crude numerical ratings. Building on the economics and trust literatures, this study examines the rich content of feedback text comments and their role in building a buyer's trust in a seller's benevolence and credibility. In turn, benevolence and credibility are proposed to differentiate among sellers by influencing the price premiums that a seller receives from buyers.

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